Gas It Up

June 30, 2016

The past 3 months

Natural gas prices have been on the rise

After establishing a new floor

With the Nymex dropping under $2.00 a dekatherm

It started an accent

And is now heading towards $3.00

That would be a 50% increase

What caused this sudden rise….

Some say…..

Supply / Demand

Others say greed

With the market choking on gas

And gas prices being low

They started shutting down wells

That can certainly drive prices up

Now throw the weather into the mix

Did we have a spring…

Maybe we will have a hot summer

The market is in flux

Should the long range forecast see a hot summer

Prices will continue to rise

If cooler temperatures prevail

You will start seeing prices back off

Should that be the case…

We will see a window of opportunity

For gas and electric prices will drop and

Become even more competitive

In the energy business

Timing is everything

We’ll keep you posted

1…2…Punch

January 29, 2014

The polar vortex punch

 

Keeps punching

 

 

This week we saw

 

Temperatures plunge….

 

Once again

 

 

It may have been nice….

 

The first time around

 

 

 

But by now…

 

 

People seem to be getting

 

A little groggy

 

 

It’s time to change the channel

 

 

 

As I stated last week

 

The energy market did react

 

To the plunging temperatures

 

 

Basis (transportation cost) went up 1000% in 1 day

 

 

Over the past year

 

 

Basis pricing

 

Has been at a 10 year low

 

 

The jump in pricing

 

Had many experts just shaking their heads

 

 

They were finding themselves in…

 

 

Unchartered waters

 

 

This was beyond whiplash

 

 

 

We do not see these prices sustaining

 

 

If you look at natural gas futures

 

A couple months out

 

Prices tend to be

 

More reasonable

 

 

 

You just do not want to

 

Be shopping your account

 

And include the present month energy pricing

 

In the mix

 

 

For it will skew the whole proposal

 

And you will end up paying a premium

 

 

 

They say…

 

Patience is a virtue

 

 

In this business

 

You need it

The Dilemma

September 23, 2011

Natural Gas prices continue to be very competitive.

 

However…

 

This has presented a dilemma.

 

 

 

When you request pricing for an existing client,

 

Who has been participating in the deregulated market…

 

 

And

 

 

You compare the proposed price

 

vs

 

What the client has paid over the past 12 months.

 

 

Guess what???

 

 

 

The price normally is higher than what they have paid.

 

 

 

The client’s response normally is:

 

 

Why is it more?

 

 

Why can’t I play less?

 

 

 

That’s a good question,

 

 

 

Now what answer do you
want?

 

 

 

 

Let’s just stick to
the facts

 

 

 

The truth is that the natural gas market is a moving target

 

It is a commodity that is being traded 24/7

 

 

 

 

Several years ago (2008),

 

Natural gas prices shot up

 

 

Market prices were $12 – $14 a decatherm

 

Which translates into $1.20 – $1.40 a therm

 

 

That was the commodity cost to the providers

 

 

 

So consumers were even paying a higher rate

 

 

 

Since that time, prices have steadily dropped

 

 

 

You have probably seen me reference

 

That many analyst saw natural gas pricing

 

Reach a floor in

 

Late October / November 2010.

 

 

Problem is….

 

That nobody knows where the floor is…

 

 

Until you pass it

 

 

 

Well guess what??

 

 

Prices may once again be creating a floor as we speak.

 

 

The Nymex continues to drop

 

It has gone full circle over the last year

 

 

What do you mean the
last year?

 

 

It has gone full circle over the past 2 months

 

 

 

I have a friend, who
is a chiropractor,

 

He asked me what is
wrong with my neck.

 

 

I told him I have been
watching the Nymex!!!

 

 

 

The problem becomes….

 

 

There is more upside risk

 

Then there is downside risk.

 

 

Translated……

 

How much lower can prices go?

 

 

All future indications show prices going up

 

 

 

What are your options:

 

 

 

Float the market while prices continue to remain low

 

 

If you see prices starting to go up

 

You can always turn around and lock your position

 

 

There are various other options…

 

Winter locks…Lock in the price for months with the highest
usage

 

 

Basis locks….Lock in the transportation cost and float the
nymex

 

 

Anyone of these options can be used

 

To be proactive against future price spikes

 

 

 

 

Another issue:

 

 

 

We spoke in the past that natural gas prices

 

Are made up of 2 components

 

Nymex… The cost of natural gas out of the ground in Gulf of
Mexico

Basis…… The cost of transporting the gas from LA to your
local provider

 

Index…….The sum of the 2 or the base cost of the commodity
to the provider

 

 

While the Nymex prices are creating new floor space

 

The basis cost is higher than it should be

 

The result….

 

Adding a low Nymex cost

 

To a higher than normal basis cost

 

Gives you a higher overall cost

 

Then what you were paying over the last year

 

 

 

I find this all very
interesting…

 

(You have to say that
while you are rubbing your chin)

 

 

What should you do?

 

 

HBS presents all the options

 

 

We look at where the market has been

 

 

What are the future projections showing?

 

 

We look to educate our clients

 

So they have a full understanding of how the market works

 

 

We want our clients to feel comfortable

 

 

 

Knowing that they made the best decision

 

For their company

 

When all the facts were presented

 

 

 

To learn more about
deregulated energy opportunities for your business email george@hbsadvantage.com

 

Visit us on the web www.hutchinsonbusinesssolutions.com

Written by Tom Zeller Jr

 For the Huffington Post

A veritable explosion in the number of natural gas wells in the United States in the late 2000’s resulted in only modest gains in production, a new study finds, suggesting that the promise of natural gas as a bountiful and economical domestic fuel source has been wildly oversold.

The findings, part of a broader analysis of natural gas published Thursday by the Post Carbon Institute, an energy and climate research organization in California, is one of a growing number of studies to undermine a natural gas catechism that has united industry, environmental groups and even the Obama White House in recent years.

It also comes on the heels of another study, published Monday, lending credence to claims that modern natural gas drilling techniques are contributing to methane contamination of drinking water wells in surrounding communities.

According to the author of Thursday’s study, David Hughes, a geoscientist and fellow at the institute, the bedrock assumptions of the natural gas revolution — that new drilling techniques have cracked open deep layers of shale and made available a 100-year supply of clean, domestic energy that could displace dirty coal and oil — are simply not true.

“The real takeaway here is scale,” Hughes said in a telephone interview. “If you look at the production estimates as the government is making them now, you’re talking about a near quadrupling of shale gas by 2035.”

The estimates come from the Energy Information Administration, which suggested in its most recent projections that shale gas would account for 45 percent of all natural gas production in the U.S. by 2035 — up from roughly 14 percent currently.

But the actual productivity profile of new, unconventional wells — often tapped at tremendous expense — is far less clear than is normally portrayed, Hughes said. Studies at existing fields, or plays, suggest that many shale wells tend to be highly productive in their first year, and then decline steeply — sometimes by as much as 80 percent or more — after that, requiring new wells to be plumbed

Indeed, while the number of active gas wells, which has nearly doubled since 1990, to half a million, has increased in the U.S, production per well has declined by nearly 50 percent over the same period, Hughes said, suggesting that as the industry converts increasingly to shale gas, more and more wells will be needed to maintain even a baseline level of production — much less to create a substantive increase.

If that’s the case, Hughes said, then those hoping that the shale gas boom might one day provide enough natural gas to replace coal for electricity generation, or oil as a transportation fuel, will be sadly disappointed. Indeed, he said, the number of new wells that would be needed to meet these goals would create a dystopian landscape of well pads and gas pipelines that few people would want to inhabit.

“If that were to happen, for those people living in Pennsylvania and New York, well, they haven’t seen anything yet,” Hughes said, referring to those states now sitting atop major shale gas deposits.

Mr. Hughes also highlighted the growing number of environmental costs that come with natural gas development. These include everything from water intensity and heavy truck traffic to the risks of localized pollution associated with hydraulic fracturing, or fracking — the high-pressure injection of water, sand and chemicals underground to break up rock formations and release gas.

More broadly, questions have been raised about the greenhouse gas footprint of natural gas development over its lifecycle, with at least one study suggesting that it may be no better than coal.

Dan Whitten, a spokesman for America’s Natural Gas Alliance, an industry lobby group, said in an e-mail message that the report was retreading old ground and amounted to a smear campaign on natural gas.

“This report is recycling the widely discredited claims of anti-drilling activists on greenhouse gas emissions,” Whitten said. “Their estimates run counter to the accepted scientific consensus and have been heavily criticized by climate scientists and others who are interested in a fact-based debate about our energy choices as a nation.”

Whitten also argued that it is now “the established scientific consensus” that the U.S. has “vast domestic supplies of natural gas that can play a growing role in meeting our country’s energy needs for generations.”

He also said that no one was seriously suggesting that coal or transportation fuel be entirely replaced by natural gas, and that such arguments amount to “unrealistic scenarios” presented by Hughes simply to be knocked down.

“Most experts in our energy debates understand and agree that it will take all kinds of energy to meet our nation’s growing future needs,” he said. “From our initial review, no new ground was broken with this report. As such, it doesn’t change the fact that the vast supplies of clean natural gas right here in North America give our country a chance to substantially improve energy security, clean our air and improve our economy.”

But while the resource is inarguably vast, Hughes is not alone in suggesting that the industry is overstating how much can be economically pulled out of the ground.

Arthur E. Berman, a geological consultant and director of Labyrinth Consulting Services, Inc., also argues that natural gas is not as abundant or as inexpensive as is commonly believed.

“I do not dispute for a minute that the resource size for natural gas is huge. There’s a lot of gas in place in shales,” Berman said in a telephone interview. “The question for me is how much can be produced for a profit?”

Berman says that reserves — meaning the amount of natural gas that is actually commercially available to produce — will last only about 22 years. This is partly because shale gas plays once touted to be monstrous in size have typically contracted to core areas of production a mere fraction of the originally advertised size.

Hughes, meanwhile, cited Berman and and other analysts who also say that gas, at roughly $4 per thousand cubic feet (mcf), is too cheap for companies to recoup the costs of producing it.

From Thursday’s study:

Analysts like Arthur Berman suggest the marginal cost is about $7.50/mcf compared to a current price of about $4.00/mcf. Others, such as Kenneth Medlock (2010), suggest that the break-even price ranges from $4.25/mcf to $7.00/mcf. The Bank of America (2008) has placed the mean break-even cost at $6.64/mcf with a range of $4.20/mcf to $11.50/mcf. One thing seems certain: Shale gas, which appears to be the only hope for significantly ramping up U.S. gas production, is expensive gas, much of which is marginally economic to non-economic at today’s gas prices.

And yet, with easier-to-reach, conventional sources of gas largely depleted, the ability to pull gas from deep layers of shale rock has been touted as a game changer, and the notion was quickly embraced by a broad cross-section of social, political and business interests.

Writes Mr. Hughes:

First, the shale gas industry was motivated to hype production prospects in order to attract large amounts of needed investment capital; it did this by drilling the best sites first and extrapolating initial robust results to apply to more problematic prospective regions. The energy policy establishment, desperate to identify a new energy source to support future economic growth, accepted the industry’s hype uncritically. This in turn led Wall Street Journal, Time Magazine, 60 Minutes, and many other media outlets to proclaim that shale gas would transform the energy world. Finally, several prominent environmental organizations, looking for a way to lobby for lower carbon emissions without calling for energy cutbacks, embraced shale gas as a necessary “bridge fuel” toward a renewable energy future. Each group saw in shale gas what it wanted and needed.

And at least for now, the 100-year slogan continues.

“A lot of times, things are right underneath our feet, and all we need to do is change the way we’re thinking about them,” says Erik Oswold, an ExxonMobil geologist, in an ad circulating on the online video service Hulu. “A couple decades ago, we didn’t realize just how much natural gas was trapped in rocks thousands of feet below us. Technology has made it possible to safely unlock this cleaner burning natural gas. These deposits can provide us with fuel for 100 years.”

President Obama, delivering a speech on energy policy at Georgetown University on March 30, echoed the industry’s mantra.

“Now, in terms of new sources of energy, we have a few different options,” the President said. “The first is natural gas. Recent innovations have given us the opportunity to tap large reserves — perhaps a century’s worth of reserves, a hundred years worth of reserves -– in the shale under our feet.”

As reported by Bipartisan Policy Center

March 22, 2011

Media Contact:

Paul Bledsoe
Bipartisan Policy Center
(202) 637‐0400
pbledsoe@bipartisanpolicy.org

Washington, DC – A national producer—consumer Task Force convened by the Bipartisan Policy Center (BPC) and the American Clean Skies Foundation (ACSF) issued a report today finding that the growth of shale gas production “reduce[s] the susceptibility of [natural] gas markets to price instability and provide[s] an opportunity to expand the efficient use of natural gas in the United States.”

The Task Force’s 70-page report, the result of a yearlong review, calls on governments to “encourage the development of domestic natural gas resources, subject to appropriate environmental safeguards” given that the efficient use of gas has the potential to reduce harmful air emissions, enhance energy security and improve the prospects of U.S.-based energy-intensive manufacturers.

With a more stable price horizon for natural gas, the report also urges state public utility regulators and industry to consider making greater use of longer term supply contracts. “Rules that unnecessarily restrict the use of or raise the cost of long-term contract and hedging tools for managing supply risk should be avoided,” the Task Force said.

“We have a good problem,” said Task Force co-Chair, Norm Szydlowski, Bipartisan Policy Center and President and CEO of SemGroup Corporation. “Finding more natural gas provides an opportunity that is as much unparalleled as it was unexpected. Fundamental changes that have taken shape in the domestic supply and demand balance for natural gas, including an unprecedented level of available storage and import capacity, should allow markets to function more efficiently and fluidly in the future,” said Szydlowski.

“The extensive work of this diverse, expert panel identifies a small number of practical regulatory and policy measures that can provide the necessary confidence to support new investment in efficient applications of natural gas,” said Ralph Cavanagh, Senior Attorney and Co-Director of the Energy Program at Natural Resources Defense Council. “If the industry can meet high standards of environmental performance for extracting and delivering the fuel, we are looking here at very good news for America’s economy and industrial competitiveness, the environment, and our nation’s energy security.”

“The Task Force findings and recommendations reflect optimism that the robust supply horizon for natural gas presents fresh opportunities—not only to move beyond prior price volatility concerns shared by both consumers and producers, but to develop new tools for managing price uncertainty,” said Marianne Kah, Chief Economist, Planning and Strategy of ConocoPhillips. “With sound policies, the nation can capitalize on this abundant natural gas supply and convert it into intelligent energy progress.”

“With U.S. natural gas now one-fourth the price of oil on an energy equivalent basis, it is further welcome news to consumers that, with the right policies, U.S. natural gas appears poised to enter into an era of greater price stability,” said Paula Gant, Senior Vice President for Policy and Planning of the American Gas Association.

“The fact that a diverse Task Force like this could reach a consensus on these particular findings and recommendations was unexpected,” said Task Force co-Chair Gregory C. Staple, CEO of ACSF. “This consensus suggests that, although we may have a stalemate on many other energy issues, there is at least one important area – natural gas – where progress is within reach,” Staple added.

Background

Interest has grown recently in natural gas as a cleaner, low-carbon, low-cost alternative to other fossil fuels in the electric power and industrial sectors. For example, in his State of the Union address, President Obama called for a federal clean energy standard for generating electricity that could be partly satisfied by using more domestic natural gas.

The Task Force was jointly convened by the BPC and ACSF in March 2010 to examine historic causes of instability in natural gas markets and to explore potential remedies. Task Force members, listed below, represent natural gas producers and distributors, consumer groups and large industrial users, as well as independent experts, state regulatory commissions and environmental groups.

Key Task Force Findings and Recommendations:

1. Recent developments allowing for the economic extraction of natural gas from shale formations reduce the susceptibility of gas markets to price instability and provide an opportunity to expand the efficient use of natural gas in the United States.

2. Government policy at the federal, state and municipal level should encourage and facilitate the development of domestic natural gas resources, subject to appropriate environmental safeguards. Balanced fiscal and regulatory policies will enable an increased supply of natural gas to be brought to market at more stable prices. Conversely, policies that discourage the development of domestic natural gas resources, that discourage demand, or that drive or mandate inelastic demand will disrupt the supply-demand balance, with adverse effects on the stability of natural gas prices and investment decisions by energy-intensive manufacturers.

3. The efficient use of natural gas has the potential to reduce harmful air emissions, improve energy security, and increase operating rates and levels of capital investment in energy intensive industries.

4. Public and private policy makers should remove barriers to using a diverse portfolio of natural gas contracting structures and hedging options. Long-term contracts and hedging programs are valuable tools to manage natural gas price risk. Policies, including tax measures and accounting rules, that unnecessarily restrict the use or raise the costs of these risk management tools should be avoided.

5. The National Association of Regulatory Utility Commissioners (NARUC) should consider the merits of diversified natural gas portfolios, including hedging and longer-term natural gas contracts, building on its 2005 resolution. Specifically, NARUC should examine:

  • Whether the current focus on shorter-term contracts, first-of-the-month pricing provisions and spot market prices supports the goal of enhancing price stability for end users,
  • The pros and cons of long-term contracts for regulators, regulated utilities and their customers,
  • The regulatory risk issues associated with long-term contracts and the issues of utility commission pre-approval of long-term contracts and the look-back risk for regulated entities, and
  • State practices that limit or encourage long-term contracting.

6. As the Commodity Futures Trading Commission (CFTC) implements financial reform legislation, including specifically Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Pub. L. 111-203), the CFTC should preserve the ability of natural gas end users to cost effectively utilize the derivatives markets to manage their commercial risk exposure. In addition, the CFTC should consider the potential impact of any new rulemaking on liquidity in the natural gas derivatives market, as reduced liquidity could have an adverse affect on natural gas price stability.

7. Policy makers should recognize the important role of natural gas pipeline and storage infrastructure and existing import infrastructure in promoting stable gas prices. Policies to support the development of a fully functional and safe gas transmission and storage infrastructure both now and in the future, including streamlined regulatory approval and options for market-based rates for new storage in the United States, should be continued.

Complete copies of the Task Force report along with a library of original commissioned research can be found here and here.

Sponsoring Task Force Members:

Gregory C. Staple
Task Force Co-Chair
Chief Executive Officer
American Clean Skies Foundation

Norm Szydlowski
Task Force Co-Chair
Bipartisan Policy Center;
President & CEO
SemGroup Corporation

Ken Bromfield
U.S. Commercial Director, Energy Business
The Dow Chemical Company

Carlton Buford
Lead Economist
The Williams Companies

Peter Sheffield
Vice President, Energy Policy and Government Affairs
Spectra Energy Corporation

Ralph Cavanagh
Senior Attorney and Co-Director, Energy Program
Natural Resources Defense Council

Paula Gant
Senior Vice President for Policy and Planning
American Gas Association and on behalf of the American Gas Foundation

Carl Haga
Director, Gas Services
Southern Company

Byron Harris
Director
West Virginia Consumer Advocate Division

Marianne Kah
Chief Economist, Planning and Strategy
ConocoPhillips

Todd Strauss
Senior Director, Energy Policy, Planning and Analysis
Pacific Gas & Electric Company

Additional Task Force Members:

Colette Honorable
Chairman
Arkansas Public Service Commission

Sharon Nelson
Former Chair, Board of Directors
Consumers Union

Sue Tierney
Managing Principal
Analysis Group, Inc.;
Former Assistant Secretary of Energy

Bill Wince
Vice President, Transportation and Business Development
Chesapeake Energy Marketing

Marty Zimmerman
Professor
Ross School of Business, University of Michigan;
Former Group Vice President, Corporate Affairs,
Ford Motor Company

About the American Clean Skies Foundation

The American Clean Skies Foundation, a Washington-based nonprofit, supports energy independence and a clean, low-carbon environment through expanded use of natural gas, renewables and efficiency. For more information, visit www.cleanskies.org.

About the Bipartisan Policy Center

The Bipartisan Policy Center (BPC) is a non-profit organization that was established in 2007 by former Senate Majority Leaders Howard Baker, Tom Daschle, Bob Dole and George Mitchell to develop and promote solutions that can attract public support and political momentum in order to achieve real progress. The BPC acts as an incubator for policy efforts that engage top political figures, advocates, academics and business leaders in the art of principled compromise. For more information, please visit our website.

What’s Up?

March 24, 2011

I say potato.

You say patato.

The difference may be just an inflection

Or the pronunciation of the word

(in this case it was my spelling, so you get the gist)

However, we all know what we are discussing.

Shame that the same thing cannot be said

About the word…….

Deregulation……

We should all know what we are discussing

We should all be on the same page…..

But there are so many stories……

Each one providing the best deal……..

A once in a lifetime offer……

Get in on the ground floor…….

What is going on????

With electric prices being at a 7 year low

We are finding, that everyone and their brothers,

Are now selling energy………

I get calls at my office almost….. everyday

Would like to switch electric providers?

How would you like to earn some extra cash?

The market is being inundated.

I am surprised Comcast and Verizon are not selling energy?

HBS has been selling energy to commercial clients for over 10 years

I would like to take a few moments to add our perspective.

Define what we see as the opportunity.

Educate our clients and friends.

Business

 

 

  • The deregulated electric market price is closely tied to natural gas pricing.

 

  •  
    • Thirty ( 30%) of the electric generated in the US is made with natural gas. Therefore, natural gas is a good indicator of the market prices.

 

  • Natural gas market prices are the lowest they have been in the last 4 years.

 

  •  
    • As a result, the deregulated market price of electric has also dropped.

 

  • Many experts think that we may have hit the floor on natural gas prices back at the end of October 2010.

 

  •  
    • The market has gone up and down several times since then, but it has never gone back to the low point recorded on October 25th, 2010.

 

This information indicates that clients should be looking to lock in or fix the price of electric with a 3rd party deregulated provider for a minimum of 1 year…… possibly 2 years.

We have actually seen instances where the 2 year fixed price is more competitive and offers more savings.

Each account is unique. Prices are all based on demand factors.

Are you a seasonal account?

(Highest usages during summer months)

Do you use most of your energy during the day?

(On Peak….when prices are higher)

Or do you have mixed usage?

(On Peak and Off Peak)

All these factors play into defining the deregulated market rate for your account.

Do you have annual usage demands

vs seasonal usage demands……

Your fixed rate will be lower.

(your demand usage is being spread out over the entire year)

Is your usage a mixed between on peak usages and off peak usages

vs only using power during the day,

when rates are the highest

Then your rates will be lower.

Each provider has their sweet spot. A client profile, they are most competitive with in that market.

HBS is an independent energy management consultant. Thru our strategic partnerships, we represent all the major deregulated gas and electric providers selling energy in deregulated states.

Our expertise is the ability to properly define the market and select the provider(s) who will bring the most competitive fixed rate, offering the best opportunity for savings to our clients.

What about Variable rates?

There are many companies now offering variable rates for electric.

Month to month contracts….offering savings of around 10%.

If the market prices are near the bottom,

Why would it not be in the clients’ best interest to lock in a fixed rate instead of floating with a variable rate?

As the summer season starts,

Market rates will also go up,

Due to summer demand.

So will those variable rates!!!!

It only makes sense to lock in on a fixed price,

if the market presents the opportunity.

In the deregulated energy market,

You are dealing with a commodity.

Timing is everything.

Let HBS be your eyes and ears.

Next week, we will outline using an independent broker vs buying online. Also, what does it mean when you say the price is fully loaded

To learn more about deregulated opportunities for your company email george@hbsadvanatge.com  

Visit us on the web www.hutchinsonbusinesssolutions.com

Government boards regulate the utility market price.  Although, the state utility regulator is required to pass market savings onto the consumer, local providers buy natural gas on the wholesale market and bill their customers’ retail. We put our clients in a wholesale position because brokers/marketers have the flexibility to buy gas when rates are lower and pass the savings onto their clients.

Comparing and deciding among the various offers.

In the new deregulated industry, buying natural gas is like getting a home loan. You can select between:

  • Contract terms of 1 to 5 years
  • Lock in at a fixed rate for an extended period of time
  • Choose variable rates and rely on an experienced gas manager to get you the lowest price

Why switch?

Most consumers switch to brokers/marketers to save money.  Together you can determine your comfort level.

Ø    Security – if the utility price makes you feel more secure, choose an option that offers a percentage less than the utility for guaranteed savings.

Ø    Lowest Price – if you want to have a knowledgeable gas company managing your gas supply, select the variable rate and let a gas supplier manage it for you.

Ø    Fixed Price – if you think prices are going to continue to rise and you want to be sure of your bills, choose a fixed price.

Regulated rates are not fixed rates.

Each province or state has an agency that regulates utility rates. Utilities can and do apply changes to rates.  They are not allowed to offer fixed contracts. By signing up with an energy marketer you can avoid these unexpected rate changes. We competitively tender your natural gas needs to deregulated natural gas marketers.

If you choose to buy from a gas broker/ marketer, your gas service won’t change.

You will continue to receive a bill from your distributing utility authority indicating their regulated delivery charge (about half of your bill) and a gas supply charge that goes to the gas supplier. If you also have rental equipment or a service contract, these will appear on your bill, as usual.

It’s important to remember these cost splits when comparing prices. The suppliers, brokers and/or marketers are offering rates on only half of your bill. As previously stated, the distribution charge and monthly service charge is fixed.  It is strictly regulated by an Energy Board or Public Service Commission. As a result, when a promotional message claims a 10% saving, it is ONLY referring to that 10% controlled by all energy brokers.

You do the math.

To qualify in the deregulated market, your company must spend a minimum of $5,000.00/ month ($60,000.00/year) on natural gas. Half of that monthly fee ($2,500.00) is a regulated transportation and delivery charge. The remainder is the gas supply charge.

A gas marketer offering a 10% savings is offering a savings of $250.00/ month, 10% of the $2,500.00 gas supply charge. Your annual savings would be $3,000.00.

Saving is parity to how much you spend. The above example applies only to minimum qualifications.  The more you use, the more you save.

Hutchinson Business Solutions (HBS) is an independent energy management consultant. We have been providing deregulated energy solutions to our clients for over 10 years. HBS clients are saving from 10% to 20% on their natural gas supply bills.

Large market swings offer you big savings.

If you have been following market prices for natural gas, over the past couple of years, you have probably noticed the large market swings. ie: In 2008, PSEG prices ranged from $1.07 per therm in February to $1.64 per therm in July. In 2009, prices dropped and we saw $.889 cents per therm in January with a low of $.496 cents a therm in September.  With so much market fluctuation, we have been advising our clients to float their accounts, based on the market index.  In this way, our clients can save anywhere between, 8% up to 20%, depending on whom their local provider is.

Choosing to float the market index does not preclude you “locking in” on a fixed price at any time during the term of the contract. Conversely, if you choose a fixed price, you are unable to change to a float when market prices go down.

Want to learn more about opportunities to save in the deregulated natural gas market email george@hbsadvantage.com or call 856-857-1230.

Visit us on the web www.hutchinsonbusinesssolutions.com

What is an “aggregator”?
An aggregator is a company or association that buys power at a wholesale price from power generating companies and passes the savings on to its customers. Because the aggregator is buying vary large amounts of power on behalf of all its customers, they can negotiate for the best rates on your behalf.

Does taking advantage of the deregulated electricity market require changes in wiring to my business?
None whatsoever. Your new agreement to buy electricity through an aggregator simply requires your local utility (the company that delivers power to your meter) to utilize electricity generated by the companies that sell power wholesale to the aggregator.

Can I take advantage of the deregulated electricity market in my home?
Not at this moment, in most cases. Aggregators need to acquire the bargaining power of larger electricity users to be able to negotiate favorably for their clients. At some time in the future, aggregators may turn to groups of homeowners.

Is there any service interuption when I change my electricity provider?
The change from buying power from your current provider to your new provider is “seamless”, in most cases simply requiring a reading of the meter at the time your new service takes effect. There is usually no need to replace the meter or otherwise interupt your power service. Your aggregator will take care of all the paperwork, contacting the various utility companies, etc.

Who do I call if the power is out?
Your local utility is responsible for delivering electricity to your business. In case of a storm-related or other outage, call your local utility just like you do now.

Will my local utility put me “at the back of the line” if I report an outage?
No, this is illegal. More importantly, in practical terms, most outages are not to just one address, but to an entire area or zone of their service grid. These repairs restore everybody’s service regardless of where they buy their electricity from.

How does the billing for my electric service work? How do I pay my bill?
You’ll still get just one bill. Whereas you currently typically receive just one bill to cover the generation, transmission, and delivery of power from one company, you now will receive one bill that shows the cost of all of these elements. In order to keep administration costs as low as possible and deliver power at the lowest cost to all customers, most aggregators require automated monthly payment of your bill, in the same safe and reliable manner as you may currently schedule your bank or credit card to automatically pay other regular bills for your business or home.

Who do I contact for questions about my bill?
For questions regarding your bill for electricity contact your aggregator. For questions regarding the delivery of your service such as outages, meter checks, etc., contact your local utility, which is responsible for delivering power (from whatever source) to your business.

Who is responsible for the safety and reliability of my service?
The delivery system is still the responsibility of your local utility and as such, its safety and reliability. The utility will maintain the lines and repair them if there is an outage or storm. The regulatory body overseeing utilities in
your state will help to ensure that the utility continues to provide a safe, reliable delivery system for your use.

Can I buy power from one specific power generating company?
Since saving money is most people’s primary reason for buying electricity through an aggregator, your energy may come from any number of different electricity generating companies at any given time, depending on price. Other options are usually available to purchase electricity solely from a “green” generator, such as solar and wind farms.

Do I have to make a long-term committment to a different electricity provider?
Avoid making long-term commitments with an aggregator or broker, at least initially. A safer option is to choose an aggregator who offers a no-commitment service so you can be satisfied that you are receiving the expected savings and service. If, for whatever reason, you are unsatisfied, you’ll have the option of returning to your previous electric supplier.

What reasons are there to stay with my current electricity company?
If you are a stockholder receiving dividends from your current provider (although the potential savings may cover much more than your current dividends), or if you are not concerned with the amount of money you spend for electricity.

How do I find a reliable aggregator to help cut my electricity bills?
Email George@hbsadvantage.com to learn more of how yo can save in the deregulated Market

Visit or webite to learn more www.hutchinsonbusinesssolutions.com

The state of New Jersey has found they are in a dilemma.:

Demand for electricity is projected to grow at 1.5% a year for the next 8 to 10 years.

Electric prices are treanding at a 10% increase.

NJ current facilities are not designed to handle the increased demand. As a result, NJ may be faced with rolling brown outs in the next 8 – 10 years.

To address this issue the state has drafted an Enegy Master Plan.

It is designed to incentize the public to invest in clean or green energy alternatives that will help reduce energy demand 22.5% by 2020.

Click on the link provided below to read the draft and feel free to contact george@hbsadvantage.com to learn more about solar incentives available for your business.

http://www.state.nj.us/emp/home/docs/pdf/summary.pdf

Visit www.hutchinsonbusinesssolutions.com to learn more about opportunities available to create savings and increase profitability.

Recently a client contacted us and was questioning if there were opportunities to save money in the electric deregulated market. They had multiple accounts and were paying very high monthly bills for LPLP rated accounts.

 Below is an overview we provided to help our client understand the market and where the opportunities for savings are found.

David, we understand your question about the size of these two accounts. Both accounts are on the PSE&G rate class LPLP. This means they have primary service (higher voltage accounts). 

LPLS accounts have secondary service (lower voltage accounts).  

Customers with primary power services are automatically part of the CIEP group (Commercial and Industrial Energy Pricing). CIEP customers are paying an hourly floating PJM index rate plus a $0.05 per KW retail adder. 

LPLS customers must have a peak load share at or above 1000KW to be considered a CIEP and qualify. 

The savings is found in being able to discount the $.05 per KW retail added.

This discount can provide substantial savings.

 Look at your bill! 

If you are not sure if your company qualifies, take a look at your bill.  

For PSEG customers see if you are listed as a LPLS or LPLP account?      If the answer is yes, contact us and we can discuss the options available. 

For Atlantic Electric customers see if you are listed as an AGS Primary account? If the answer is yes, contact us and we can discuss the options available. 

Would you like to know more electric deregulation?

Do you have a question?

You may email george@hbsadvantage.com

 Hutchinson Business Solutions ……Your CFO on the Go.  

Creating Opportunities Today,…Defining Savings for Tomorrow.

Visit http://www.hutchinsonbusinesssolutions.com/ to learn more about saving opportunities available for your company. 

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